Autumn Statement 2014: Initial reflections

Posted On December 3, 2014 By mhauk

Stamp Duty Changes could lead to increasing house prices

Changes to the way stamp duty is calculated changing the ancient system which used to produce unfair results have been broadly welcomed across the board. Purchasers buying houses under £937,500 will now be better off under the new rules which broadly equate to 98% of residential transactions.

There will however be an unintended affect on houses which are valued around the previous boundaries. These properties (which have been artificially reduced because of the boundaries) are likely to go up in value overnight and prospective vendors are likely to try and cash in on stamp duty savings on offer.

Iggle Piggle the big winner as large corporates and banks get hit!

Children’s television was amongst the winners of the Autumn Statement which targeted banks and large corporate tax avoidance in the UK. New reliefs for children’s television will be introduced along with reliefs for orchestras. There were large changes to the way residential properties are taxed with the abolition of the old arcane “slab” methodology with a fairer incremental approach .

The devil will be in the detail with regard to the large corporate tax avoidance plans which looks to tax profits artificially shifted out of the UK at 25%. The details will be announced on 10 December and will be considered carefully to see if they are workable. Utilisation of the losses that arose in Banks during the financial crisis is going to be restricted going forward so that they can only be used up at half the rate. Interestingly, this could lead to the Banks paying Corporation tax and reducing the speed at which they will be able commence dividends to their large body of shareholders including the UK Government!

Improvements to R&D tax relief

The Chancellor seems determined to maintain the UK as one of the “goto” places to undertake innovation.

R&D tax relief provides a tax saving for companies involved in qualifying development work. As corporation tax rates have been falling, as have the benefits of this relief. The Autumn statement has announced an increase in the benefits partly to make up for this.

The tax relief for profitable SMEs will provide a cash tax saving of 26% of the costs, up from 25% and loss-making SMEs will be able to claim a cash credit of 33.35%, a slight increase from the current rate.

The cash savings for larger businesses will increase by 10% to 8.8%.

Although relatively small increases, this shows the Chancellor, with cross party support, as the relief was originally introduced under the Labour government in 2000, provides comfort to those business that do claim and could claim, that the relief will continue for the foreseeable future.

There will also be a consultation starting next month on how to improve the administration of the scheme for small businesses on which the MHA innovation tax relief team will take a leading role.

This, together with an excellent corporate tax regime in the patent box tax for the exploitation of the resultant intellectual property, shows that the UK remains an excellent place for innovation.

If you would like to discuss the implications of the Autumn Statement 2014 please contact us.